Some of the world’s largest commodity traders were on Thursday accused by a Swiss campaign group of taking advantage of weak governance in African countries to sell low-quality, highly polluting fuels that are banned in Europe.
The “Dirty Diesel” report, which focuses on Trafigura and Vitol because they have large offices in Switzerland, is the latest broadside against an industry that has faced calls for tighter regulation from environmental and leftwing campaign groups in the country.
Public Eye, which fights injustices with links to Switzerland, said the three-year study into fuel shipments to African countries had identified much higher sulphur levels in diesel than are allowed in Europe.
It also criticised the practice of commodity traders buying cheaper feedstocks from European oil refineries and blending them at sea to create so-called “African quality” fuels, which are legal under laxer rules in many African countries and have contributed to rising pollution levels.
“Africa’s weak fuel standards allow traders to use cheap blendstocks, dropping production costs and making the production of low fuels a lucrative business model,” said Public Eye in the 150-page report.
“By increasing air pollution, high sulphur fuels have direct consequences for public health.”
The report argued that moving to ultra-low sulphur diesel could prevent 25,000 premature deaths in Africa per year by 2030, and 100,000 by 2050, because the continent’s increasing urbanisation meant road pollution was a growing issue. In certain African countries, the legal limit on sulphur in diesel is 5,000 parts per million where as in Europe the maximum is 10 ppm.
Switzerland is a global hub for buying and selling of commodities, hosting about 500 trading companies employing more than 10,000 people.
The industry has come under increased scrutiny from Swiss politicians and campaign groups in recent years who say the wealthy country should not be a secretive oasis for potentially exploitative dealing with resource-rich developing countries.
Africa’s legal limit on sulphur in diesel in parts per million
In a referendum in February, Swiss voters rejected a proposal put forward by leftwing politicians for a ban on speculation in food and agricultural products, but Public Eye and other campaign groups are pushing for greater transparency by commodity traders.
Vitol said there were numerous inaccuracies in Public Eye’s report, but, like Trafigura, it did not dispute the core finding that they and other traders sold high sulphur diesel to African countries.
Europe’s legal limit on sulphur in diesel in parts per million
Vitol and Trafigura said they supported efforts to tackle pollution in Africa, but stressed they had no control over countries’ specifications and standards for fuels.
“In Africa, governments control and manage the import of fuels and only they are able to determine local fuel standards,” said Vitol.
Trafigura said it backed moves by the African Refiners Association, a pan-African representative body, to raise fuel quality standards and reduce permitted sulphur levels. “This co-operative effort is the right way to effect necessary change,” it added.
The association said that if Swiss commodity traders followed the recommendations in the Public Eye report then their roles would be filled by “possibly less reputable” organisations from other nations that would simply supply fuel that met official specifications. “The result would be that nothing changes in Africa,” it added.
Public Eye also called for greater transparency of the close and opaque relationship between Trafigura and Angola.
The campaign group’s report alleged that Angola was a “notoriously corrupt” country, where the elite “monopolise” oil, its main natural resource.
Trafigura is the largest shareholder in Puma Energy, one of the biggest fuel sellers in Africa, including Angola. Sonangol, the Angolan state oil company, has a 30 per cent stake in Puma, while an investment vehicle with links to Angola’s ruling family owns 15 per cent.
Trafigura said it had taken steps to increase its transparency, including by signing up to the Extractive Industries Transparency Initiative, a voluntary grouping involving natural resources companies, governments and campaign groups.
The initiative requires companies including energy and mining groups, as well as commodity traders, to disclose payments to countries where both sides have committed to the programme.
Last year Trafigura revealed it made payments of $4.3bn in 2013 to state-controlled oil companies covered by the initiative, including Nigeria, for crude, gas, and various petroleum products.
Payments to countries that have not signed up to the initiative but where Trafigura is active, including Angola, were not disclosed.